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SME’s split on EU referendum; but open to persuasion

QuoteSearcher commissioned a YouGov survey of 683 SME decision makers to investigate their opinions on a potential UK exit from the European Union and get a feel for how owners of small to medium sized businesses think an EU exit would impact their businesses (https://www.quotesearcher.co.uk/eustudy/).

Professor Simon Down commenting on the survey says “It’s important to note that it seems as though political perceptions shape rational and the instrumental behaviours of SME owners. When asked, SME decision makers revealed certain things about their perceptions even if it was not necessarily in their business’ interest. Political views could therefore be having an impact on many of these SMEs’ business strategies.”

Younger vs. Older Generation: A third of entrepreneurs under the age of 35 believe an EU exit will have a negative effect on their customer relationships. 49% of young entrepreneurs thought that an EU exit would ultimately have a negative effect on their customers. This was not reflected in older entrepreneurs – 52% of the over 55’s and 45% of the 45-54 year olds said it would have no effect

“I’m not surprised the study has revealed a split between the younger and older generations as it conforms to stereotypes. Other research I’ve read suggests that in the under-35 age category there is a sense that entrepreneurship is now seen as a positive cultural and economic feature – this was not the case during the 60s, 70s and 80s.”

“To the younger generation entrepreneurs are cultural heroes, whereas this wasn’t the case when the older generations were growing up. Today, the young entrepreneurs are by and large better educated and in a wider range of subjects such as business and technology. However, it will be interesting to see if these young entrepreneurs’ views change as they get older and assimilate with those held by older SME decision makers.”

Small vs. Medium Enterprises: 66% of all small enterprise decision makers believe their ability to hire will not be affected by an EU exit – because they do not hire staff from outside the UK. However, those from medium sized enterprises had a different perspective, with 30% believing it would become harder to get the skills they need and 33% believing that their hiring ability would not be affected.

“There is actually a huge difference between a small and medium-sized business, the latter quite often being much more substantial, formalised and professional than their counterparts. This is the issue with “lumping” the two together as an “SME” can range anywhere between 10 and 250 employees which means there is a large difference between the two.”

“In medium sized enterprises there is a much greater need for skills in a range of different sectors and technologies etc. Furthermore, these companies will have at least one tier of managerial staff who will have one to two specialisms, meaning the skills that they are looking for are likely to be much more sophisticated.”

“Smaller businesses not hiring from outside the UK could come from a lack of resources or skills which are required to hire specialist workers from different nations. Meanwhile, medium sized businesses are generally more formal and can have dedicated HR departments who will hire a person with the required skills regardless of where they are from. If they need people they’ll get them from wherever and deal with the costs and administrative procedures. This is particularly true for those that work in high-tech companies, biotech firms etc. as the skills they need to grow are not always in high supply in Britain.”

Regional Differences: 29% of SME decision makers in the North East believe an EU-exit will decrease the general level of skill and ability of the workforce in their businesses. This is the highest in any region, with the West Midlands being the lowest with only 3% believing it will have a negative effect.

“Statistically-wise, entrepreneurship is not as dynamic in the North East as in say, London; however the area has benefited from EU grants dedicated to economic development and regeneration projects. Again, this could be a political issue as people in the area may feel that the EU is beneficial as it redistributes wealth and helps the area.”

“In Scotland this political reasoning is also likely to be the reason why SME decision makers feel leaving the EU would have a negative impact on their staff skills as, in general, the country has a positive view of the EU. Those based in London may have a different motivation based on skills shortages and access to the most qualified skills.”

How do you think SMEs will vote in the EU-Referendum next year? 65% of SME owners who vote for Labour and the Lib Dem’s also believe that an EU exit will affect their ability to hire staff from the EU, while 55% of SME’s who vote for either the Conservatives or UKIP believe it will have no impact on their ability to import skills from abroad.

“I think the influence of the media in general will have profound effect. Currently, the government are backtracking on the EU exit, which is supported by the mainstream media and influential groups such as the Confederation of British Industry (CBI).”

“Businesses by and large, including SMEs, will probably follow this shift in opinion against an EU exit. As more campaigning happens the anti-EU narrative may become less popular and wavering SME owners will want to look established and traditional so will follow suit. Most SMEs don’t want to be seen as rash or taking too many risks, so will back established opinions.

“However, this all depends on broader economic and political issues that we are seeing right now including the Greek crisis, the instability of the Euro and the current migration debate. This is an interesting, multi-faceted issue, and evidence has shown that the perceptions of business owners are not necessarily the same as their business behaviours.”

“The left and right wing divide is interesting as it confirms the theory that those who are left-leaning or liberal are more open to being a member of the EU, whilst those that support UKIP or the Tories are slightly more negative says Professor Simon Down. It’s also interesting to see that the political views of SME decision makers are by and large quite conservative, which adheres to stereotypes surrounding business owners.”

Professor Simon Down is Deputy Dean for Research and Enterprise at the Lord Ashcroft International Business School – Anglia Ruskin University.  The survey was commissioned by QuoteSearcher who are a niche insurance specialist. The full survey can be found at https://www.quotesearcher.co.uk/eustudy/

NB All figures, unless otherwise stated, are from YouGov Plc. Total sample size was 683 SME decision makers. Fieldwork was undertaken between 22nd- 26th June 2015. The survey was carried out online. The figures have been weighted and are representative of all GB adults (aged 18+).

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